Exploring the Potential of Warehousing and Working Capital in Enabling Scale for Aspiring and Emerging Funds
The small and growing businesses (SGB) finance asset class plays a crucial role in propelling economic growth and fostering employment opportunities across Africa. However, aspiring and emerging funds, especially women-led funds within this sector, encounter significant obstacles that can impede their sustainability and scalability.
When utilized effectively, warehousing and working capital can play a pivotal role in enabling early-stage funds to demonstrate a track record and catalyze capital flows from institutional investors. However, there are risks to both IVs and investors if these mechanisms are not designed, structured, deployed and managed effectively.
This brief aims to explore the prevailing and emerging best practices in structuring and deploying warehousing and working capital deals to bolster investment readiness, and crowd in additional investment for target investment vehicles, whilst mitigating risk.
This brief will explore:
- The role that working and warehousing capital plays in enabling scale for aspiring and emerging funds.
- The prevailing and emerging best practices in structuring and deploying warehousing and working capital deals
- The limitations and risks to fund managers and investors to utilizing warehousing and working capital.
- The challenges faced by fund managers in accessing warehousing and working capital as well as potential opportunities for improving access to these facilities.
- The Africa Growth Fund’s approach to warehousing and working capital, including a preliminary view of the Fund’s learnings to date in committing warehousing and working capital to aspiring and emerging IVs in its pipeline.
- Actionable recommendations for enhancing support mechanisms and fostering a conducive environment for fund scalability.